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Blaming leaders for team relationship conflict? The roles of leader-member exchange
differentiation and ethical leadership
Mingjian Zhou Shuisheng Shi

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NBRI
5,2

134
Received 26 September 2013
Revised 18 December 2013
Accepted 20 March 2014

Blaming leaders for team

relationship conflict? The roles
of leader-member exchange
differentiation and ethical
leadership
Mingjian Zhou

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Department of Management, Shenzhen Graduate School,

Harbin Institute of Technology, Shenzhen, China, and

Shuisheng Shi
Department of Management, Hong Kong Baptist University,
Kowloon Tong, Hong Kong
Abstract
Purpose The purpose of this paper is to extend our understanding of the role of leaders in team
relationship conflict. Leader-member exchange (LMX) differentiation was hypothesized to be positively
related to team relationship conflict. Additionally, ethical leadership was hypothesized to moderate
relations between LMX differentiation and team relationship conflict.
Design/methodology/approach Hypotheses were examined in a sample of 79 working teams.
Data were collected via a questionnaire containing measures of LMX, team relationship conflict and
ethical leadership.
Findings Hypotheses were supported by the data. LMX differentiation was positively related to
team relationship conflict, and ethical leadership weakened the relationship between LMX
differentiation and team relationship conflict.
Originality/value This is the first theoretical analysis and empirical study of relationships between
LMX differentiation and team relationship conflict. Theoretically, by using LMX theory to account for
team-level outcomes, this study extended power of LMX theory. Practically, these results suggest that
leaders may be responsible for team relationship conflict.
Keywords Ethical leadership, Leader-member exchange differentiation, Team relationship conflict
Paper type Research paper

Nankai Business Review

International
Vol. 5 No. 2, 2014
pp. 134-146
Emerald Group Publishing Limited
2040-8749
DOI 10.1108/NBRI-09-2013-0036

1. Introduction
Relationship conflict found its prevalent existence in organizations. Over the years,
researchers have found that it is detrimental for both individuals involved and for
groups in which relationship conflict resides (De Dreu and Weingart, 2003). It has been
shown that relationship conflict is negatively associated with affective commitment
(Mills and Schulz, 2009), teamwork behavior (Chen et al., 2011), work performance (Jehn,
1994; Lau and Cobb, 2010) and team effectiveness (Simons and Peterson, 2000).
However, while the consequences of relationship conflict have been well documented,
little is known about its antecedents. Our knowledge of the antecedents of relationship

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conflict mainly comes from several studies that examined team member diversity (Jehn
et al., 1997; Tepper et al., 2011; Mohammed and Angell, 2004), task conflict (Choi and
Cho, 2011; Greer et al., 2008) and conflict management strategy (Dechurch and Hamilton,
2007; Friedman et al., 2000).
An important limitation of the extant literature is that studies have almost
exclusively taken the team member perspective in examining antecedents of team
relationship conflict (see Harris et al., 2011 for an exception), yet large strides have
not been made. To address this literature gap, we attempt to approach team
relationship conflict from a leader perspective and develop a theoretical model that
takes into account the role of leadership. Leader-member exchange (LMX; Graen
and Uhl-Bien, 1995) theory provides a good framework to understand supervisorsubordinate working relationships. According to LMX theory, leaders differentiate
between subordinates, such that leaders form a high-quality exchange relationship
with some subordinates and establish a low-quality transactional relationship with
others (Dansereau et al., 1975). Given the premise of LMX theory that leaders form
differentiated relationships with subordinates, we are surprised to find that no
empirical study to date has looked into the relation between LMX differentiation and
relationship conflict. Drawing on LMX and social comparison theories, we expect
that LMX differentiation will trigger a social comparison process within the group
and bring in relationship conflict. In this regard, leaders are to be blamed for team
relationship conflict. But is this all the story? By integrating ethical leadership
theory with LMX theory, we further argue that ethical leadership interacts with
LMX differentiation to influence relationship conflict and acts as a buffer in the
relationship.
The purpose of this study was to extend our understanding of the role of leaders in
team relationship conflict. Specifically, we tested the proposition that LMX
differentiation has a positive effect on team relationship conflict. We then examined the
moderating role of ethical leadership in the relationship between LMX differentiation
and team relationship conflict. Through this study we propose to contribute to broaden
our knowledge on the antecedents of team relationship conflict.
2. Theory and hypotheses
2.1 Effect of LMX differentiation on team relationship conflict
Team relationship conflict involves interpersonal disagreements and tensions among
team members and is usually expressed with negative feelings such as anger, distrust,
fear and frustration (Jehn, 1995). Based on social category theory, prior research
revealed that relationship conflict was related to surface-level team composition of a
group as well as deep-level differences with respect to team members personalities,
values and attitudes (Tepper et al., 2011; Mohammed and Angell, 2004). Thus, it is likely
that man-made differences among team members, namely, differences in LMX quality
in the present study, are also related to team relationship conflict.
LMX differentiation is a group-level construct, which refers to a set and outcome of
dynamic and interactive exchanges that occur between leaders and members
(Henderson et al., 2009). We expect that LMX differentiation may trigger social
comparison processes in the group, which, in turn, will increase relationship conflict in
the group. First, the varied levels of LMX quality within the group are likely to trigger
social comparison processes. In high-quality exchange relationships, subordinates may

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get more information (Dienesch and Liden, 1986), mentoring (Scandura and
Schriesheim, 1994), empowerment (Liden et al., 2000) and other resources from the
leaders (Dienesch and Liden, 1986). Additionally, subordinates in high-quality exchange
relationships can be assigned tasks that are more challenging and more valuable. In
contrast, a low-quality exchange relationship is characterized by a low degree of mutual
trust, respect and obligation. Subordinates in low-quality exchange relationship only do
what is required by their job descriptions (Graen and Uhl-Bien, 1995). However, LMX is
a limited resource (Liden et al., 1997); on one hand, leaders dominate in the development
of LMX relationship, while on the other hand, leaders lack time and organizational
resources to form high-quality relationships with all subordinates (Dienesch and Liden,
1986). Research suggests that other individuals in ones social group act as the reference
point and the context for social comparison (Brown et al., 1992). Given the high value and
scarcity of high-quality exchange relationships (Gerstner and Day, 1997; Schriesheim
et al., 1998; Yrle et al., 2002), subordinates may compete with their colleagues to develop
or maintain a high-quality exchange relationship (Wayne and Ferris, 1990).
Second, subordinates in high-and low-quality relationships will get different results
from the social comparison process, causing a relationship conflict in the group. Social
comparison is defined as the process of thinking about information about one or more
other people in relation to the self, including an upward social comparison, parallel
comparison and downward social comparison (Wood, 1996). The social comparison
process plays a critical important role in individuals assessment of the work
environment (Greenberg et al., 2007). Research suggests that employees perceptions of
LMX social comparison are positively related to job performance and citizenship
behavior, and explained unique and meaningful variance in outcomes beyond their own
LMX relationship with leaders (Vidyarthi et al., 2010). We argue that an upward
comparison with better-off others will make subordinates in low-quality LMX feel
threatened and will undermine their self-identity and self-evaluation (Lockwood, 2002).
Furthermore, they may even envy those who are in high-quality exchange relationships
(Vecchio, 2005), given that leaders usually play a more important role in the
development of an LMX relationship than subordinates (Chen and Tjosvold, 2007), and
that some subordinates reported that they once tried very hard to improve their LMX
relationship but they failed to do so (Maslyn and Uhl-Bien, 2001). In contrast,
subordinates in high-quality LMX relationship will delight in their own superiority in
the downward comparison processes (Lockwood, 2002). It has been revealed that people
in better situations may avoid contacts with less fortunate others (Taylor and Lobel,
1989). Besides, subordinates in high-quality LMX may feel the envy from worse-off
others, have difficulty working together and experience conflict.
In addition to upward and downward comparisons, subordinates may make parallel
comparison with similar others. Subordinates who experience similar LMX
relationships can well perceive themselves to be similar with each other, and the more
similar the LMX relationship between the two subordinates, the more closely their
relationship is likely to be (Sherony and Green, 2002). According to similar-attraction
theory, subordinates in similar low-quality LMX relationships are more likely to
develop a close relationship based on similar psychologies characterized as envy, and
may form a subgroup called out-group. Similarly, subordinates in high-quality LMX
relationships will form a subgroup called in-group with similar others. Shared
membership will reduce perceptions of risk (Brewer, 1981); thus, the formation of the

out-group and the in-group may enhance the effect of subordinates toward
dissimilar others, thus increasing relationship conflict. Therefore, we hypothesized the
following:

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H1. LMX differentiation will be positively related to team relationship conflict.

2.2 The moderating role of ethical leadership

Ethical leadership is defined as the demonstration of normatively appropriate
conduct through personal actions and interpersonal relationships, and the
promotion of such conduct to followers through two-way communication,
reinforcement, and decision-making (Brown et al., 2005). Brown et al. (2005) further
pointed out that ethical leaders are characterized as honest, trustworthy and fair.
The ethical leaders not only pay attention to ethics themselves and provide
subordinates with voice, a procedurally or interpersonally just process, but also set
ethical standards to regulate subordinates behavior; in addition, ethical leaders care
about the ethical consequences of their decisions and make principled and fair
decisions. A social learning perspective suggests that subordinates view leaders as
role models and learn what behavior is rewarded and punished via role modeling.
Thus, it is reasonable to expect that both ethical leaders and their subordinates tend
to be honest, trustful and fair (Brown et al., 2005).
We predict that high levels of ethical leadership will buffer the positive impact of
LMX differentiation. First, we argue that ethical leaders will pay much attention to
procedure justice which will undermine subordinates psychology of social comparison.
LMX literature suggests that LMX relationship develops from the initial interaction
between leaders and subordinates and involves the consequent efforts of both leaders
and subordinates, and that subordinates are not able to improve their LMXs without the
effort of their leaders (Dienesch and Liden, 1986). Ethical leaders who value procedure
justice may respond positively to subordinates goodwill to improve their LMX
relationships and allocate their resources accordingly. Therefore, subordinates in the
group may well perceive that their extant LMX relationships are not unchangeable and
they have the opportunity to improve their LMX relationships if they make efforts to do
so. Prior research suggest that when individuals could image a similarly successful self,
they were inspired by the others accomplishment, and when they could not image a
similarly outstanding self, they will be demoralized (Greenberg et al., 2007). Thus, when
comparing with superior others, subordinates in low-quality exchange relationships
will probably try their best to improve their LMX relationships, and their self-identity
and self-evaluation will not be undermined too much in the upward comparison
(Lockwood, 2002). These subordinates will not have strong motivation to envy the
superior others (Vecchio, 2005). On the other hand, subordinates in high-quality
exchange relationships will not delight too much in their own superiority in the
downward comparison processes, and will probably feel alarmed at the prospect of
falling to a low-quality exchange relationship. It is also likely that subordinates in high
LMX relationships may tend to make upward social comparisons rather than
downward social comparisons (Greenberg et al., 2007). All in all, the boundary between
out-group and in-group subordinates will become weak and vague, and the comparison
processes and relationship conflict will not be further triggered. Thus, we propose the
following hypothesis:

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H2. Ethical leadership will moderate the relationship between LMX differentiation
and team relationship conflict, such that the relationship will be stronger when
ethical leadership is low rather than high.
3. Method
3.1 Sample and procedure
Data were collected via a questionnaire. The sample was composed of 79 project teams
from 16 firms located in Shenzhen, China. Surveys were put into unsealed envelops and
handed to respondents, with a letter of explanation clipped to the top, describing the
purpose of the survey and the confidentiality of the process. All surveys were marked
with a number to differentiate respondents from different work teams. Participants
returned questionnaires anonymously in sealed envelopes to researchers and in return
received 20 in reward. Three hundred fifty employees from 80 teams participated in
the survey, and all the questionnaires were returned. After removing largely
uncompleted and arbitrarily completed questionnaires, we obtained a useable sample of
334 employees from 79 teams. The average team size was 4.2. The majority (71.6 per
cent) of the sample was male, and 59 per cent respondents were in their twenties. The
majority (96.7 per cent) of participants earned a post-secondary school degree
(associates, bachelors or graduate degree). More than half (50.6 per cent) of the
respondents were married.
3.2 Measures
Most widely advocated scales were used to measure variables in the present study.
Because the respondents mother language was Chinese, the survey questionnaires were
translated from English to Chinese. We followed the standard back-translation
procedure. Responses to survey questions were measured on 5-point scales (1
strongly disagree, 5 strongly agree).
LMX differentiation. LMX differentiation was calculated by the standard deviation
of each team members ratings of LMX. A seven-item measure developed by Graen and
Uhl-Bien (1995) was used to measure LMX. An example item is My working
relationship with my manager is effective ( 0.892). Besides, the control variable
mean LMX in the present study refers to the mean of each team members ratings of
LMX.
Relationship conflict. Three frequency subscales adapted from Jehn (1995) were used
to measure relationship conflict. An example item is There is much relationship tension
in my work group ( 0.813).
Ethical leadership. Ethical leadership was assessed using the ten-item scale of Brown
et al. (2005). An example item is My manager always conduct his/her personal life in an
ethical manner ( 0.895).
Control variables. Group size, group mean of LMX and three demographic diversity
variables (age, gender and education) were examined as control variables because
previous research has shown that team size was positively related to affective conflict
(Amason and Sapienza, 1997), and that mean LMX was negatively related to team
conflict (Boies and Howell, 2006). We also controlled for demographic diversity
variables in that they were shown to affect team relationship conflict (Tepper et al., 2011;
Mohammed and Angell, 2004). Blaus (1977) index was used to measure diversity on
self-reported demographic variables (age, gender and education level).

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3.3 Level of analysis and aggregation

We generated ethical leadership and team relationship conflict by aggregating
subordinate ratings to the group level. First, we assessed the degree of team member
agreement regarding ethical leadership and team relationship conflict by
calculating the rwg statistic. The rwg statistic is used to determine inter-rater
agreement. The mean rwg values for ethical leadership and team relationship conflict
were 0.977 and 0.975, respectively. Additionally, these values are above the
acceptable value of 0.70 (Dixon and Cunningham, 2006). Second, we used the ICC(1)
to examine the variability in responses at the individual level within a group. The
ICC(1) for ethical leadership and team relationship conflict were 0.18 and 0.25,
respectively. These values were lower than the value of 0.50 recommended by
researchers and were acceptable (James, 1982); thus, aggregation is justified.
Finally, we used the ICC(2) to assess the reliability of the group means. The ICC(2)
for ethical leadership and team relationship conflict were 0.49 and 0.58, respectively.
Although these values were not greater than 0.70 criteria the rwg values and ICC(1)
already provided support for aggregation.

Team
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139

4. Results
4.1 Measurement model results
We conducted maximum likelihood confirmatory factor analyses (CFA) to examine the
distinctness of the variables. CFA results presented in Table I show that the
hypothesized three-factor model provided a good fit to the data, 2 96.58, root mean
square error of approximation (RMSEA) 0.078, comparative fit index (CFI) 0.965,
normed fit index (NFI) 0.949. RMSEA scores 0.08 (Hoyle and Panter, 1995) and CFI
and NFI scores 0.90 (Bentler and Bonnett, 1990) indicate that the indices fall above the
guidelines for a good fit. Furthermore, as shown in Table I, the chi-square difference
illustrates that the three-factor model yielded a significantly better fit than the two
two-factor models and the single-factor model.
4.2 Descriptive statistics and correlations
Table II shows descriptive statistics, reliabilities and correlations among the study
variables LMX differentiation, ethical leadership and team relationship conflict.
Supporting H1, LMX differentiation (LMXD) was positively related to team relationship
conflict.
Model
Model 1: three-factora
Model 2: two-factorb
Model 3: two-factorc
Model 4: one-factord

df

2/df

RMSEA

CFI

NFI

96.58
228.41
379.36
514.95

32
34
34
35

3.018
6.718
11.158
14.713

0.078
0.131
0.175
0.203

0.965
0.894
0.812
0.738

0.949
0.879
0.799
0.728

Notes: N 79; a Model 1 LMXD, ethical leadership and team relationship conflict treated as
separate factors; b Model 2 LMXD and ethical leadership were combined as one factor and team
relationship conflict was treated as another separate factor; c Model 3 team relationship conflict and
ethical leadership were combined as one factor and LMXD was treated as another separate
factor; d Model 4 LMXD, ethical leadership and team relationship conflict were all combined as one
factor

Table I.
Results of CFA

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140

Variables
1. Team size
2. Mean LMX
3. Age diversity
4. Gender diversity
5. Educational
diversity
6. LMXD
7. Ethical leadership
8. Team relationship
conflict

Standard
M deviation

0.025

4.59
3.61
0.34
0.26

1.38
0.35
0.22
0.21

0.228***

0.273*** 0.095
0.197*** 0.278***

0.31
.47
3.65

0.21
0.23
0.37

0.391*** 0.128*
0.284*** 0.018
0.108* 0.080
0.100
0.018 0.051 (0.829)
0.079
0.406*** 0.070
0.016 0.019 0.134*

(0.895)
Table II.
Means, standard deviation
1.98
0.45
0.050
0.130*
0.068
0.026 0.001 0.264*** 0.389*** (0.813)
and intercorrelations
among study variables
Notes: n 79; Italicized values appearing on the diagonal indicate Cronbachs alphas; * p 0.05, *** p 0.001

4.3 Results of tests of the hypotheses

We used hierarchical regression to test the hypotheses. We tested the hypothesis by
centering the predictor, calculating moderated interaction terms (LMXD ethical
leadership) and regressing team relationship conflict on the predictor in three steps. At
Step 1, the control variables were entered. At Step 2, the main effects of LMXD on team
relationship conflict were examined. At Step 3, the incremental contribution of the
two-way interaction on the predictor was examined.
Regression results are provided in Table III. As shown in Table III, Step 1 (control
variables) explained 5.6 per cent (p 0.01) of the variance of the dependent variable, the
independent variable explained an additional 15.1 per cent (p 0.001) of the variance
and the two-way interaction contributed an additional 1 per cent (p 0.05) to the
explained variance. Hypothesis 1 proposes that LMXD will be positively related to team
relationship conflict. The results support this hypothesis. LMXD is positively and
significantly related to team relationship conflict ( 0.212, p 0.001). Hypothesis 2
predicts that ethical leadership will moderate the relationship between LMXD and team
relationship conflict. The results show that the LMXD ethical leadership was
significantly and negatively related to team relationship conflict ( 0.106, p 0.05).
Hypothesis 2 was also supported.
To graphically illustrate the interactions, we utilized a procedure recommended by
Cohen (1983), where we plotted two slopes: one at one standard deviation below the
mean and one at one standard deviation above the mean.
Figure 1 illustrates that when ethical leadership was lower, the slope of the line was
steep, suggesting that the positive relationship between LMXD and team relationship
conflict was stronger when ethical leadership was lower.
5. Discussion
In this study, we set out to examine the direct relationship between LMXD and team
relationship conflict (H1) and how ethical leadership moderates this relationship (H2).
We found support for the direct positive relationship between LMX differentiation and
team relationship conflict, and a possible explanation can be found in the LMX and
social comparison theory. When leaders differentiate, the varied level of LMX
relationships among the group may trigger the social comparison processes and thus
may increase relationship conflict in the group. Additionally, the formation of

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Variables
Step 1: Control variables
Team size
Age diversity
Gender diversity
Educational diversity
Mean LMX
Step 2: Independent variables
LMXD
Ethical leadership
Step 3: Interaction
LMXD ethical leadership
R2
Overall R2
Df
Overall F

Model 1
0.000
0.128*
0.023
0.007
0.217***

0.056**
0.056
327
3.868**

Team relationship conflict

Model 2

Model 3

0.020
0.021
0.057
0.025
0.131

0.036
0.018
0.062
0.005
0.164*

0.212***
0.440***

0.191***
0.460***

0.151***
0.207
325
12.137***

0.106*
0.009*
0.217
324
11.203***

Notes: * p 0.05, ** p 0.01, *** p 0.001 (two-tailed); exclude cases pairwise

Team
relationship
conflict
141

Table III.
Hierarchical moderated
regression results for the
interaction of LMXD and
ethical leadership

Figure 1.
Plot of the interaction
between LMXD and
ethical leadership on team
relationship conflict

subgroups may even intensify relationship conflicts between out-group and in-group.
Our second hypothesis, which predicted the moderating effect of the ethical leadership
on the relationship between LMXD and team relationship conflict, was also supported.
The positive relationship was stronger when ethical leadership was low rather than
high. A possible explanation is that ethical leaders value justice and undermine the
psychology base of comparison.
5.1 Theoretical implications
We make several major contributions to the literature. First, we extend the growing, but
still very limited, body of research on the antecedents of team relationship conflict.
Researchers have generally agreed that relationship conflict causes significant

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142

problems in the workplace, but little research has investigated why relationship
conflicts occur (De Dreu and Weingart, 2003). We have added support to the research
that LMXD is an antecedent of team relationship conflict. This finding is similar to
extant empirical findings that show team diversity may cause team relationship
conflict. But our contribution lies in the finding that LMXD, man-made team
diversity caused by leaders, is related to team relationship conflict. By examining
the critical role of leaders in bringing team relationship conflict, we provided a
totally new perspective to understand the antecedents of team relationship conflict.
Second, traditional LMX literature focuses on the leader-member dyads in isolation
but fail to take into account of social context of the LMX relationships (Vidyarthi
et al., 2010). Thus, by looking at leader-member dyads horizontally and examining
the relations between LMXD and team relationship conflict, we highlight the
explanation power of LMX theory on group-level outcomes. In addition to the
knowledge that high-quality exchange relationships are beneficial and low-quality
exchange relationships are harmful (Gerstner and Day, 1997), we now know that the
existence of different levels of exchange relationship may also hurt. Finally, by
testing the moderating role of ethical leadership, we further clarify the theory
boundary of the direct relationship and underscore the merit of integrating ethical
leadership with LMX theory in future research and theory.
5.2 Practical implications
We offer several practical implications of our results. The first implication is that
because LMX differentiation is related to team relationship conflict, all effort should
be made to reduce the LMX differentiation. Managers themselves should be
encouraged to be aware of the dark side of differentiation leadership and make every
opportunity to avoid it. In this regard, we pointed out a possible path to reduce team
relationship conflict, which should shed some light on improving individual and
group outcomes. The second implication directly stems from our interaction results.
Given that ethical leadership moderates the relationship between LMX
differentiation and team relationship conflict, an organization should support an
ethical leadership culture and take into the merit of ethical leadership when
recruiting leaders.
5.3 Limitations and future research directions
This study also bears several limitations, and we invite future researcher to examine
and further deepen our understanding of leaders role in team relationship conflict. First,
this study suffers from common-method bias. In this study, LMXD, ethical leadership
and relationship conflict were all reported by subordinates. Although we applied some
techniques to minimize the impact of common-method bias on our study, the
common-method bias is not extinct and may still have some influence on our study.
Second, our arguments rest largely on social comparison theory, yet no related variables
were included in our theoretical model. If future researchers introduce some variables
related to social comparison and examine a moderated-mediation model or
mediated-moderation model and if these models are supported, the argument and

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mechanism proposed in this study would be much convincing. Third, we propose that
the mobility of LMX relationship in groups will affect the social comparison process. But
our cross-sectional design could not validate whether the proposed mobility can be
realized and thus undermines our explanations. We encourage future researchers to use
longitudinal designs and measure the mobility of LMX to better understand the effects
of quantity and mobility of LMX on team relationship conflict. Finally, future
researchers can develop new models based on our study to better understand the role of
leaders in team relationship conflict. For example, a possible research design is to
examine demographic diversity and LMXD together in one model to compare their
impact on relationship conflicts. Besides, ethical leadership was found to be negatively
related to team relationship conflict ( 0.440, p 0.001) in this study, thus future
researchers can explore the relationship between ethical leadership and relationship
conflict.

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About the authors

Mingjian Zhou is an Associate Professor in Harbin Institute of Technology Shenzhen Graduate
School, Peoples Republic of China. He received his PhD in Management from Zhejiang University,
China. His research interests are in the field of organizational behavior, human resource
management and service management.
Shuisheng Shi is a Research Associate in the School of Business, Hong Kong Baptist
University, Hong Kong. His research interests are abusive supervision, office politics and
subjective well-being. Shuisheng Shi is the corresponding author and can be contacted at:
shishuisheng@gmail.com

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communication style and leader member exchange, Journal of Communication
Management, Vol. 6 No. 1, pp. 257-268.

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